Oregon House takes up property taxes tomorrow

by Bob Clark

The Oregon House Revenue Committee plans to conduct a hearing on House Joint Resolutions 7, 8, 13 and 20 this Thursday, 8am, at the Capitol (“What’s coming up at the Legislature this week“, Statesman Journal, March 2, 2013).  The first three of these Resolutions would seek approval of a majority of voters state-wide in the November 2014 general election.  Resolution 20 would seek approval of a majority of voters state-wide in the next available primary election if two-thirds or more of legislators agree in both House and Senate.  The following is a summary of each of these Resolution’s proposed property tax changes:

Resolution 7

Lifts the property tax rate limit for public education, currently set at a permanent limitation of $5 per $1,000 in real market value, if local school District refers an increase in the education property tax rate limit to District voters and voters pass such increase by a simple majority; provided 50% or more of District registered voters vote in such election.  The Summary of this Resolution also suggests an automatic increase in the state-wide property tax limit to $7.50 from the current $5 limit, if voters approve this Resolution in November 2014 (the next general election).  But the body of the accompanying Resolution does not mention such state-wide increase.

Resolution 8

Effectively, removes existing property tax rate limits for both public education districts (currently capped at $5 per $1k real market value) and other local taxing districts (currently capped in the aggregate at $10 per $1k real market value).  Taxing districts may refer levy increases without limit to district area voters, and such referrals if approved by a majority, replace Measure 5 property tax rate limits (above).  The five year levy term limit would remain unchanged.

I would suspect in places like the City of Portland property tax bills would escalate at a significantly faster pace than the pace set during the last ten to twelve years (which was about 3.6% per year for the average home owner located within the boundaries of the Portland Public School District, City of Portland and Multnomah County).  In other places, notably Beaverton with a history of school operating levy defeats, property tax bills might escalate at a slightly higher pace than under current property tax limitations per Measure 5.

Resolution 13

Recalibrates taxable assessed value of property at sales price whenever said property is sold.  Recalibration would occur after December 2016 whenever real property is bought and sold, such as with the sale of one’s home.

This could have a much more dramatic change in the property tax bill for a given house, or piece of property, than the other three Resolutions.  Most property tax bills are based in large part on year 1997 property value assessments (less ten percent plus 3 percent escalation per year since 1997), and for the average City of Portland homeowner such as myself sales price (approximately real market value) is almost 70% greater than tax assessed value (to which property tax rate is applied to determine property tax bill).  One should anticipate if passed by Voters (state-wide), Resolution 13 causing a degree of instability in the Oregon real estate market.  Home sellers and buyers would be tempted in theory to speed their real estate transactions in advance of January 2017; and thereafter, real estate transactions might be a degree slower than under existing property tax law.

In theory, some recalibration might make sense, but Resolution 13 should probably be modified so as to moderate its effect on property tax bill.

Resolution 20

Lifts the property tax rate limit for public education from $5 to $6.50; and permits school districts to increase it further to $7.50 if referred to District voters and approved by a majority (50% of registered voter requirement remains unchanged).

This Resolution is possibly the most moderate of the four in effecting property tax bills, as it is restricted to public education property tax rate limit and is specific in the body of its language concerning the increase in permanent property tax rate limit.  Being an observer of the City of Portland and its budgeting, I dare say this particular City government deserves no property tax rate limit increase.  OSPIRG, no less, has been critical of City of Portland budget transparency.